UPDATE 1-Mexico central bank cuts growth forecasts for 2016, 2017

MEXICO CITY, March 3 (Reuters) - Mexico's central bank
lowered its growth outlook for this year and next on Thursday,
after the government cut spending and state oil giant Pemex
reduced its output estimate, signaling further headwinds for
Latin America's No. 2 economy.

The central bank, in its quarterly inflation report posted
online, said it now saw growth in 2016 between 2 percent and 3
percent, below the 2.5 percent to 3.5 percent forecast in its
last report.

Partly due to weakness in the sharply depreciated peso, the
Banco de Mexico said inflation would quicken in the coming
months but end the year close to its 3 percent target.

However, it said it saw no evidence of widespread pressure
on consumer prices from the weak currency.

Mexico's peso hit a series of record lows in recent months
on a collapse in oil prices, but has strengthened since the
central bank launched a surprise interest rate hike last month.

Mexican consumer prices rose more than expected in early
February to their highest since last April on a surge in food
costs, but core inflation showed only modest pressure from the
weak currency.

The bank lowered its growth expectations for 2017 to 2.5
percent to 3.5 percent from 3 percent to 4 percent previously.

Mexico's economy has slowed as uneven U.S. demand for its
exports and tumbling oil prices have hit industrial production,
but improving consumer spending has helped support growth.

Growth slowed more than expected in the fourth quarter as
industry contracted by the most in over two years despite steady
services expansion.
(Reporting by Michael O'Boyle and Alexandra Alper; Editing by
Frank Jack Daniel)